In this issue of Insolvency Now , we continue to report on data trends from Q3 and Q4 of 2024. In our previous issue, we delved into the significant increase in insolvency filings observed in early 2024 compared with our initial data from 2019. After the release of Q3 and Q4 data, we noted that the number of insolvency filings had steadily decreased compared with the previous year, returning to Q2 and Q3 2023 levels. While lower levels of insolvency filings suggest healthy business operations and domestic demand, the Bank of Canada’s January Policy Report warns of relatively weak levels of business investment, which could be masked by growth in consumer spending and a pickup in residential investment as indicated in Q4 2024 economic growth data. Growth in government spending was strong through much of 2024; however, it is estimated to have eased in Q4, in line with plans laid out in federal and provincial budgets, fiscal updates and election campaign agendas. In addition to the general insolvency data, the data on filings under the Companies’ Creditors Arrangement Act (CCAA) for the second half of 2024 revealed some noteworthy trends. The number of companies seeking protection under the CCAA remained relatively stable, at historically high levels of activity for most of 2024, with a sharp – but temporary – drop in Q3 2024. Heightened filing activity appears to be primarily driven by filings in the manufacturing and retail sectors, likely due to competition, supply chain disruptions, uncertainty over the unforeseen implications of U.S. tariff policies, interest rates, the weak Canadian dollar, other geopolitical uncertainty and changing consumer behaviour. Spotlight on Potential Impact of U.S. Tariffs More broadly, the uncertain tariff policies of Canada and the United States have created a challenging environment for many business owners, prompting them to consider selling their operations, holding off on expansion plans or exiting their industries entirely. Prolonged uncertainty can be particularly destabilizing for small to medium-sized enterprises that may not have the financial resilience to absorb such shocks. According to the Canadian Federation of Independent Business, its small business confidence indicator showed a lower mark at the start of 2025 than it did during the 2020 pandemic and the 2008 financial crisis. Implications of tariffs, counter-tariffs and other trade restrictions are taking a significant toll on business optimism. And the lowered business confidence is reflected in the rising number of business closures and transitions observed in the latter part of 2024, as owners seek to navigate the complexities of an unpredictable economic landscape. Starting in April 2025, the United States has been levying a 25% tariff on common imported Canadian goods (such as grocery items, manufacturing inputs, appliances, electronics), steel products, aluminum products, automobiles and automobile parts. Moreover, energy products (such as crude oil, natural gas, uranium, biofuels and certain critical minerals) and potash are subject to a 10% tariff. In response, the Canadian government imposed a 25% tariff on about $30 billion worth of U.S. goods in March 2025, and subsequently announced on April 3, 2025 that it plans to impose a 25% tariff on fully assembled vehicles that are not covered by the Canada-United States-Mexico Agreement (CUSMA) and a 25% tariff on non- Canadian and non-Mexican content of CUSMA-compliant fully assembled vehicles.
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Davies Insolvency Now: Issue 12
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